It seems that over the past year people are more concerned with purchasing a house instead of purchasing a good house for their use.
In many cases the purchaser has limited knowledge of how a home functions and ages over the years. The clients in some cases are basing their descision on a few pictures of the homes interior and exterior.
Cleints are put in a difficult place having to go into a bidding war on a purchase of a home. They are put in a place of very little comfort as to what they are going to purchase. They will have no idea on the condition of the home whether the home is structuraly sound, has bad odours, any mold conditions in the home, or is just not the right home for them.
Talking to a client the other day we discussed the effort and homework they put into purchasing a car is much greater that the purchase of a home that could be 10 time the value of a vehicle and an expected life span of many times over the vehicle. The purchasers do not want to be in this position but are forced due to market conditions.
The to mee seems like a great analogy of the 2 purchases. You walk up to a car look in the window of the car and let the saleman know you would like to put an offer on the car with out opening up the door and having a close look. Many people are in this position on purchasing a home which is a lifetime purchase rather than a short term purchase.
I found this article below from the Toronto star which I felt was very fitting on going into a home purchase blind folded.
Home inspections are your best friend: Property Law
When a home inspection is waived prior to purchasing a house, it is very difficult to win a lawsuit down the line.
[If you choose to skip a home inspection, make sure to have your lawyer draw up warranties on the condition of the property, says Bob Aaron.]
What happens if you discover water flowing below the floor in a newly-purchased house and you have to completely gut the basement to remove toxic mould? Who is responsible?
That was the problem facing Eric Brown and his mother, Louise, after they bought a house on MacHenry St. in Forest, Ont., from Gary and Kim Cassidy in October 2011.
During his first inspection of the house, Eric asked Gary if he had ever had any water problems in the basement and was told “no.” Gary later told Eric that there had been a water problem in the basement in 2002, but it had been fixed.
The Browns decided not to have a home inspection because the male buyer and seller were both members of the Freemason's fraternity and “could trust each other.”
Although it was important to the Browns that the property had not had any water problems, the offer which was drawn up by their lawyer made no mention of that issue.
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After closing, the Browns hired a carpenter to paint the house and do basement repairs. The carpenter discovered that the basement carpet was wet. Water was flowing under the floor, the floor strapping was completely black with mould, and there was no vapour barrier between the concrete and the strapping.
There was also mould on the baseboards and in the basement drywall, all of which had to be removed.
Mould spores were discovered in the ceiling and on the walls of the fireplace.
Water damage was discovered in the basement bathroom and in the stairs. Electrical wires in contact with heating vents and water pipes presented a serious danger and had to be repaired.
Mould was also discovered in four locations upstairs.
Eventually, the Browns sued the Cassidys for repair costs of $85,000 calculated at the modest rate of $15 an hour paid to their carpenter. The damages amounted to almost half of the $167,500 purchase price of the house. The buyers’ claim to the courts was based on fraudulent misrepresentation and concealing of a dangerous hidden defect.
The law in this area is caveat emptor: buyer beware. If there are no representations or warranties in a purchase agreement, a seller is not liable in damages to a buyer, but there are exceptions:
Where the seller fraudulently misrepresents or conceals an issue;
Where the seller knows of a hidden defect which makes the house unfit for habitation, and fails to disclose it to the buyer;
Where the seller is reckless about statements made relating to the fitness of the house for habitation.
After a four-day trial last April, Justice Russell Raikes threw out the buyers’ claim. He ruled that they had not inserted any contractual protections in the offer. “I find,” he wrote, “that the Cassidys were ignorant of the water drainage/leakage and mould contamination issues anywhere in or around the house.” He added that “this is not a case of concealment.
“(The Cassidys) saw nothing that led them to understand the problem was recurring, nor was there anything that should have led them to that conclusion.”
Not only did the Browns lose the case, but they had to pay their lawyer as well as a portion of the defendants’ legal bill.
The lessons to be learned from this sad case are:
Rule 1: Always insert a home inspection condition in an offer to purchase;
Rule 2: If you ignore Rule 1, insert representations and warranties in the agreement about the condition of the property;
Rule 3: if you ignore Rules 1 and 2, don’t expect to be compensated for any problems you discover after closing.
Bob Aaron is a Toronto real-estate lawyer. He can be reached at firstname.lastname@example.org , on his website aaron.ca and on Twitter @bobaaron2.